The Motley Fool

3 recession-proof ASX dividend shares to protect your portfolio

With the all the talk of trade wars, Brexit and interest rate cuts, the dreaded topic of ‘recession’ seems to be popping up more and more these days. Although I think a lot of reports are nothing more than click-friendly hot air, I do think now is the time to be cautious. After all, the world hasn’t seen a recession in more than a decade now (or nearly three decades in Australia).

So, here are 3 dividend shares that I think are the most ‘recession-proof’ on the ASX today.

Transurban Group (ASX: TCL)

Transurban runs a massive network of toll-roads, stretching out across most of Australia’s capital cities. In Sydney alone, Transurban owns most of the city’s tolled motorways – some of which are amongst the busiest roads in the country.

Although Transurban’s shares look mighty expensive, its current yield of 3.95% is regarded as one of the safest yields on the ASX. No matter the economic climate, people are likely to still drive on Transurban’s roads and not add hours to their journey by avoiding a $4 toll.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

Sydney Airport Holdings is a very defensive stock, by the virtue of the company owning the only commercial international airport in Sydney. While you might be able to fly to other close countries like New Zealand from other smaller airports, if you’re in NSW and want to leave our shores, Sydney is often the only option. The reverse is also true for tourists coming to see the sights in NSW.

This (in my view) makes SYD shares a great play for conservative dividend investors. Unless there is a total collapse in travel and Australian tourism, I think Sydney Airport’s 4.68% dividend is amongst the most recession-proof yields on the ASX.

APA Group (ASX: APA)

APA is Australia’s largest natural gas infrastructure provider and owns a huge network of piping (15,000 kms worth) as well as some electricity generation assets. APA has a virtual monopoly on east coast gas distribution, and so I think this stock is one of the most recession-proof businesses out there. No matter how bad a recession is, many of us will keep using gas to at least cook and heat water.

APA shares are currently offering a 4.15% yield.

Foolish takeaway

I think these 3 companies are amongst the most recession-proof dividend shares available on the ASX. The likelihood of a large dividend cut down the road is very unlikely in my view, and this makes these share very valuable to any income-focused investor.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Sydney Airport Holdings Limited and Transurban Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Related Articles...

Latest posts by Sebastian Bowen (see all)